M.A. Hanna Co. of Cleveland has accused several former employees of its color concentrates division of using the firm's customer lists, pricing information and proprietary formulations to start their own color company, which now is competing with Hanna.
But the former employees are disputing Hanna's claims, saying the information they are accused of taking can be obtained by anyone in the plastics industry, whether they worked for Hanna or not.
``We expect to demonstrate to the court that the defendants misappropriated valuable M.A. Hanna assets and used them to their economic and competitive advantage, which is a clear violation of the law,'' John Pyke Jr., Hanna vice president and general counsel, said in a Feb. 4 news release.
In a lawsuit filed Jan. 23 in U.S. District Court in Gainesville, Ga., Hanna seeks undisclosed financial damages and an injunction to halt manufacturing against E. Timm Scott, Johnny Newman and Lanier Color Co. of Gainesville.
Scott was a senior vice president at Hanna Color before resigning in August 1995 after a 23-year career with Hanna and PMS Consolidated, which Hanna acquired in 1987. Newman held various positions with PMS/ Hanna from 1978-82, and again from 1983 until resigning last July. He currently is Lanier's vinyl products manager.
In a recent telephone interview, Scott said he resigned because of ``a difference of management style and direction'' with his immediate supervisors.
``From my perspective, there was too much internal focus [at Hanna] and not enough time spent focusing on customers,'' Scott said.
When he resigned, Scott signed an agreement stating he would not compete with Hanna for a year. When the agreement expired, Scott formed Lanier with two other former Hanna Color employees: financial manager John Lees and Rob Allen, who had been sales manager for Hanna Color in North Carolina.
Since then, Lanier has hired five additional former Hanna Color employees — two color technicians, two plant workers and one maintenance worker.
``We all just wanted to get out from under the Hanna umbrella, stay in the color business and have fun again,'' Scott said.
In the lawsuit, Hanna claims Scott and Newman violated confidentiality agreements they had signed by stockpiling Hanna information while still employed by the company. Hanna also accuses Newman of telling at least one customer three weeks before he resigned that he had been terminated by Hanna and was working as a sales agent for Lanier.
In addition, the company claims that Scott was working to establish Lanier before his noncompete agreement had expired.
Scott said Hanna's claims are false and that his lawyers are preparing a response to the lawsuit.
Hanna's customer lists ``would have no value to anybody'' because ``everybody, including Plastics News, publishes lists of customers,'' Scott said.
He added that Hanna's claims in regard to pricing information and proprietary formulations also are invalid.
``A customer will tell you what price he's paying because he wants you to beat it,'' Scott said. ``And formulations are not trade secrets. Anybody in the industry can come up with a formulation in 20 minutes.''
Scott also claims Hanna paid him a modest compensation package a year after his resignation — a package that was dependent on his honoring the noncompete agreement.
``If I wouldn't have honored the agreement, I wouldn't have received the compensation,'' he said.
Scott added that he could not understand why Hanna Color, which has 18 locations in North America and recorded sales of $419 million worldwide in 1997, is taking action against his company, which has just 10 employees and posted sales of about $1 million in its first year of operation.
``Our sales are a drop in the bucket compared to Hanna's,'' Scott said. ``We're just a little guy trying to earn a living.''